AUD/USD struggles for a firm near-term direction, flat-lined below 0.7100 mark

• A combination of factors assisted AUD/USD to attract some dip-buying on Thursday.
• Sliding US bond yields and a positive risk tone undermined the safe-haven greenback.
• The RBA’s hawkish signal extended additional support to the perceived riskier aussie.

The AUD/USD pair attracted some dip-buying in the vicinity of mid-0.7000s during the early part of the European session, albeit struggled to capitalize on the move. The pair was last seen trading just a few pips below the 0.7100 mark, nearly unchanged for the day.

In the absence of any major surprises from the latest FOMC meeting minutes, the idea that the Fed could pause the rate hike cycle later this year dragged the US Treasury bond yields lower. This, along with a solid recovery in the equity markets, undermined the safe-haven US dollar and extended some support to the risk-sensitive aussie.

That said, the worsening global economic outlook should keep a lid on any optimistic move. Investors remain worried that a more aggressive move by major central banks to constrain inflation and the Russia-Ukraine war could pose challenges to the global economy. This, in turn, acted as a tailwind for the greenback and capped the AUD/USD pair.

Even from a technical perspective, spot prices have been oscillating in a broader trading range since the beginning of this week. The price action seems to suggest that the markets have already priced in the Reserve Bank of Australia's hawkish signal that a bigger interest rate hike is still possible in June. This warrants caution for bullish traders.

Market participants now look forward to the US economic docket - featuring the release of Prelim Q1 GDP, the usual Weekly Initial Jobless Claims and Pending Home Sales. The data might influence the USD price dynamics and provide some impetus to the AUD/USD pair. Traders will further take cues from the broader risk sentiment for short-term opportunities.

Technical levels to watch